By: Walter Bialas
Previously, we looked at the timing of the pipeline of multifamily units being delivered over the next couple of years in the metroplex.
One common feature of many of these units is that they are targeting the upscale renter. Quite simply, given current land and construction
costs, this is the reality of pricing today – be it here in Dallas-Fort Worth or other major markets around the US.
The worry here that gets a modest amount of press is that there is a gradually growing mismatch in affordability. After all, while we continue to add jobs at a record pace, not all can afford these upper-end rents. Interestingly, a huge part of DFW’s apartment stock is older. In fact, 41% were built pre-1990. The newest of these properties are 25 years old and the majority of this stock has not been renovated.
While greater due diligence obviously would need to be undertaken to identify potential opportunities, the rental rate disparity between these older assets and the new offerings is fairly wide. This would suggest that quality older assets could be re-positioned through an appropriate renovation into a B+ or A- property, and fetch higher rents – thereby creating a quality product that serves as a more affordable option to the new development coming on line.